While production agriculture is no stranger to facing adversity and adaptation, no one could argue that the Economic Disruption caused by the COVID-19 pandemic has required unprecedented response and strategy.
As business advisors, K·Coe has been on the front lines of hearing concerns, navigating issues and fielding questions during these unsettling times – from utilizing CARES Act programs and maintaining cash flow, to pivoting business operations and planning for family impacts.
In response to this economic disruption, K·Coe advisors have created their ‘top 5 pro tips’ that are helping to move businesses forward right now:
1 – To Move Forward: Capture the Advantages of 2020
Among the many business impacts, the pandemic has prompted serious ‘what if’ conversations. Right now – mid-pandemic and pre-election – is actually the perfect time to create or revisit your estate plan (lowest interest and tax rates we’ll see in our lifetime, and most advantageous tax laws we’ve ever had), as well as put a succession path to protect your legacy on paper. The advantages are so significant that there isn’t a single advisor that isn’t recommending doing this right now, because the window for capturing these opportunities is closing in.
2 – To Move Forward: Create a Financial Play Book
The most common questions we’re getting right now are financially-based concerns. With tighter lender restrictions, slow pay on receivables, and the unknown long-term impact of recovery, it becomes mission critical for businesses to create a play book for their financial health. Managing cash flow during a crisis needs to be ongoing as scenarios change: businesses should actively evaluate cash flow requirements, develop appropriate actions under various scenarios, investigate diversification strategies, and assess potential risks.
3 – To Move Forward: Build and Prep Lender Relationships
The pandemic has added a new level of complexity to business and lender relationships. Businesses should maintain open lines of communication with their banker, and be proactive: Round up capital in advance – don’t wait until you need it. Max out long term debt while you can, locking in the low interest rates. Prepare cash flow projections under multiple scenarios. Build a relationship with a secondary lender so you have a backup plan. Be ready for the uncertainties to come.
4 – To Move Forward: Use Family Dynamics to Your Advantage
This crisis is forcing family businesses to make unimaginable decisions—all while dealing with the complex dynamics of a family. The stress, anxiety, and fear that come out in a crisis can amplify already challenging dynamics, paralyzing decision-making or causing conflict to spiral out of control. On the other hand, the crisis can be a call to action, causing family to rally with “all hands on deck,” putting aside differences and taking actions that allow the business to survive. No matter your scenario, don’t go it alone. There is no shame in seeking help to get through this – from crisis communications management and peer group support to family conflict facilitators and mental health maintenance.
5 – To Move Forward: Apply Accuracy and Intention to All Decisions
Disruption can be paralyzing. But it’s important to keep moving your business forward. Accuracy is critical right now, so know your operational numbers and use them to your advantage. As a producer, a key driver of your profitability is marketing, and now is not the time to roll the dice and hope for the best. Calculate risks so they can be managed. Monitor cash flow daily – based on basis and future trends. Your numbers can be powerful, as they often reveal trustworthy insights for effective decisions and results.
Additional Resources for Help through Disruption
Since 1932, K·Coe has been helping ag businesses with solutions to navigate through all kinds of disruption. For this reason, our expert advisors recently held a two-day conference focused on many areas to help businesses move forward during this time. Below are a few of the topics you can access on-demand any time before September 15.
There are 30 sessions available, including:
- Farm Program Eligibility During Tough Times
- CARES Act & Legislative Outlook in a Pandemic/Election Year
- Building a Sustainable Organization
- Land is Gold: Protecting and Positioning It
- Diversification by Considering Hosting Renewable Energy and Land Conservation Strategies